Bakkt, a soon to be global digital asset trading and warehousing platform for institutional investors, will most likely postpone their launch once more. Apparently, this fourth delay is due to the Commodities and Futures Trading Commission’s (CFTC) needing more time to review and approve it.
Officially announced on August 3rd 2018, back when the price of Bitcoin was at around $7,452, Bakkt is expected to offer the world’s first 24 hour Bitcoin futures trading contracts settled in Bitcoin rather than fiat.
In addition to the trading platform, vault and wallets, Bakkt is working on merchant integration services meant to facilitate a wider acceptance of cryptocurrencies as a means of payment for day to day purchases, starting with Bitcoin.
Bakkt’s parent company, the Intercontinental Exchange (ICE), a Fortune 500 and Fortune Future 50 company, also owns the New York Stock exchange (NYSE) and dozens of other exchanges and marketplaces. Bakkt’s Bitcoin futures will therefore be added to their stock exchange terminals. According to Investopedia, Bakkt’s Bitcoin futures contracts will be cleared through ICE Clear US, which also clears trades for NYSE.
ICE has been invested in Coinbase since 2015, which itself has grown by leaps and bounds since. One of Coinbase’s recent additions is its own over-the-counter (OTC) market for institutional investors, launched on November 28 2018 (just as BTC tanked to below $4,000), featuring lower fees and lower volatility, and soon to be integrated with Coinbase Custody, another one of Coinbase’s services designed for institutional investors.
Bakkt’s investors and partners include Fortress Investment Group, Eagle Seven, Galaxy Digital, Horizons Ventures, Alan Howard, Pantera Capital, Protocol Ventures, Susquehanna International Group, Microsoft (Store and Cloud Solutions), Starbucks (Mobile Pay and Starbucks Rewards Membership), Blockstream and others.
what i see for today and tomorrow for $btc. only thing that will hurt this is the panic sellers cause of #bakkt being extended pic.twitter.com/ol8IOiPA7D— W҈o҈l҈f҈O҈f҈C҈r҈y҈p҈t҈o҈ (@MaxieX9) December 25, 2018
And yet, despite this mega joint effort to make crypto go mainstream through regulated and insured investment vehicles, Bitcoin and altcoin prices have continued to fall. Shorting continues and traders, rather than accumulate, have been cashing out gains.
If we look at Wikipedia’s definition for ‘Cui bono’ to better understand why this is happening and to whose benefit, there’s a mention of a scapegoat. The BCH fork fiasco and hash wars comes to mind, and then there’s the real or imagined scalability issue, but what’s with all the media FUD? It hasn’t been this bad even early this year when Bitcoin tanked from $20,000 down to $6,000 in a matter of weeks.
Theory #2: Bitcoin Whales needed to report their losses on crypto to offset their gains in the stock market. They sold it all, and plan to buy back after Jan 1st, triggering a bull run. Thus Bakkt and ETF are rescheduled.— Igor Soshkin (@mrsoshkin) December 23, 2018
Let’s look at whales for a moment. What is a whale? A whale is a person or a group of people (ex. Grayscale’s Bitcoin Investment Trust owns 1.16% of all circulating BTC) who accumulate a certain cryptocurrency by buying low, waiting for the price to go up, sell some, wait for the price to go down again and buy some more. Over and over until they have a very large number of coins.
In the process they shake out the weak hands who panic sell by doing the opposite, namely, buy high and sell low – something that further diminishes the price and volume making it look like no one is buying and the market is in free fall.
Now, if a whale knows that something big is coming, they’ll rinse and repeat because the goal is to have as many coins for as cheap as possible. The price will rise considerably at a known future date so it doesn’t matter if it’s cheap and worth much less right now as long as they can keep buying more for less knowing that each one of their coins will drastically rise in value.
And low volumes? They are great for whales. Whales are huge and easily make waves, swinging the market (price) in the desired direction. Given the upcoming institutionalization of Bitcoin, we must ask, will this change and what exactly will change it?
While die hard HODLers eagerly await the upcoming Bitcoin halving in 2020, traders expect a dump on the launch news, Bakkt that is, which usually occurs about five to ten days before the actual event, along with the Chinese New Year dump on or before February 5 2019, whichever comes first (in case there’s a fifth Bakkt launch delay).
For a start, one day futures contracts won’t do much to reduce volatility. In fact, they are limited to 24 hour periods as a means to protect investors from the volatility that is a natural part of crypto trading, at least for the time being. Stablecoins aside, only massive commercial use of cryptocurrencies in place of fiat debit/credit/mobile pay could change that fact. In the meantime, it will take an enormous amount of consistent FOMO (fear of missing out) news to generate the next bull trend.
Back in July 2018 CCN reported that OTC BTC trades exceed those of public exchanges by an estimated 300%-400% and that those trades are neither recorded on the blockchain nor included on CoinMarketCap.
The question must be raised as to what extent OTC trading contributes to the volatility of the crypto markets and whether large scale institutional investors will change things by moving their crypto trading from OTC markets to regulated public platforms like ICE’s Bakkt, Fidelity’s Digital Assets, Eris Exchange’s ErisX, and the much anticipated VanEck/SolidX Bitcoin ETF partnership.
A very interesting video interview by the Keiser Report called ‘Hold On To Your Private Keys (E1316)’ covers the topic of rehypothecation which Investopedia defines as a “practice by banks and brokers of using, for their own purposes, assets that have been posted as collateral by their clients.” In relation to Bitcoin this raises the question as to whether Bitcoin owned by investors will be traded by those warehousing it.
Given that each Bitcoin is a unique digital coin registered on the Bitcoin blockchain, this could cause problems and influence valuation, to say the least. To mind comes the current Bitcoin Private alleged scam claiming that the team secretly pre-mined 2 million BTCP coins thereby altering the total supply of 21 million BTCP coins, with the point being that cryptocurrencies are limited supply alternative currencies.
Off chain trades like OTC and some atomic swaps could and probably already have caused similar issues resulting in devaluation. The term fake coins has been used more than once and we can only hope that this won’t become an issue now that the Bitcoin mining reward halving is just a year away.
Despite existing and potential future issues in regard to overall crypto valuation, we are looking at a bright future consisting of more development and commercial implementation of the technology which combined with institutional investment and the 2020 halving is bound to drive cryptocurrencies and blockchain tech toward mass adoption and trillion dollar market caps.
Bitcoin (BTC) $3,844.22 USD (0.93%) 12/26/18
NEED AN ARTICLE OR PRESS RELEASE FOR YOUR ICO OR CRYPTOCURRENCY? A PLACE TO SUBMIT A PRESS RELEASE? PROOFREADING AND EDITING? REWRITING? INFOGRAPHICS AND SOCIAL IMAGES? LET’S TALK!
Crypto Content Services | The Crypto Industry Journal @KatarinaCrypto